Correlation Between ICU Medical and Aveanna Healthcare

Can any of the company-specific risk be diversified away by investing in both ICU Medical and Aveanna Healthcare at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining ICU Medical and Aveanna Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ICU Medical and Aveanna Healthcare Holdings, you can compare the effects of market volatilities on ICU Medical and Aveanna Healthcare and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in ICU Medical with a short position of Aveanna Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of ICU Medical and Aveanna Healthcare.

Diversification Opportunities for ICU Medical and Aveanna Healthcare

-0.36

Correlation Coefficient

ICU Medical  Aveanna Healthcare

Very good diversification

The 3 months correlation between ICU and Aveanna is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding ICU Medical and Aveanna Healthcare Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aveanna Healthcare and ICU Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on ICU Medical are associated (or correlated) with Aveanna Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aveanna Healthcare has no effect on the direction of ICU Medical i.e., ICU Medical and Aveanna Healthcare go up and down completely randomly.

Pair Corralation between ICU Medical and Aveanna Healthcare

Given the investment horizon of 90 days ICU Medical is expected to under-perform the Aveanna Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, ICU Medical is 2.15 times less risky than Aveanna Healthcare. The stock trades about -0.02 of its potential returns per unit of risk. The Aveanna Healthcare Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  576.00  in Aveanna Healthcare Holdings on September 5, 2024 and sell it today you would lose (27.00) from holding Aveanna Healthcare Holdings or give up 4.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ICU Medical  vs.  Aveanna Healthcare Holdings

ICU Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ICU Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, ICU Medical is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Aveanna Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aveanna Healthcare Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Aveanna Healthcare is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with ICU Medical and Aveanna Healthcare

The main advantage of trading using opposite ICU Medical and Aveanna Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ICU Medical position performs unexpectedly, Aveanna Healthcare can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Aveanna Healthcare will offset losses from the drop in Aveanna Healthcare's long position.

The idea behind ICU Medical and Aveanna Healthcare Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.